The Nifty 50 was up over 1% to rise above the 24,150 level, while the BSE Sensex surged 1,000, above the 79,500 level, as of 12:29 a.m. IST.
Key factors behind today’s rally:
1) Banking stocks lead the charge
Banking stocks were at the forefront of Monday’s rally, with the Nifty Bank index surging past the 55,000 mark for the first time ever, powered by robust quarterly earnings from private sector majors. HDFC Bank jumped nearly 2% to a fresh 52-week high of Rs 1,950.70, while ICICI Bank climbed about 1% to a new all-time high of Rs 1,436.00.The strong results reinforced investor confidence, prompting brokerages to reiterate their positive outlook on financials. Nomura, for instance, highlighted low earnings risk and attractive valuations in the sector, especially with monetary policy turning supportive. The Reserve Bank of India has already delivered 50 basis points of rate cuts in 2025 and is expected to ease further by another 100 bps by year-end.
Liquidity conditions have also improved, thanks to the RBI’s recent measures—including open market operations, variable rate repos, and forex swaps—which have pushed the banking system into surplus mode. Additionally, a reduction in risk weights for NBFCs and microfinance institutions has helped accelerate credit flow, further supporting the banking sector’s rally.
2) FII inflows provide further momentum
Foreign institutional investors (FIIs) extended their buying streak, emerging as net buyers on April 17 with equity purchases worth Rs 4,668 crore. In contrast, domestic institutional investors (DIIs) booked profits, selling equities worth Rs 2,006 crore.
Over the past three sessions, foreign portfolio investors (FPIs) have turned positive on Indian equities, supported by a weakening U.S. dollar and optimism around India’s growth prospects.
“Even though the global economic scenario is mired in uncertainty, India appears relatively resilient. India is the only large economy which can grow at 6% even in a slowing global economy. This, along with the declining dollar, has the potential to attract more FPI inflows into India in the short run,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Foreign institutional investors are likely to focus on domestic consumption themes such as financials, telecom, aviation, hotels, select autos, real estate, cement, and healthcare. “Growth stocks in the digital space also have the potential to move up,” Vijayakumar said, while cautioning that the IT sector may remain under pressure amid concerns of a sharp slowdown in the U.S. economy.
3) Weakening dollar lifts sentiment
The U.S. dollar slipped to a three-year low of 98.246 against a basket of major currencies on Monday, offering a further tailwind to Indian equities. A weaker dollar typically reduces India’s import bill and boosts foreign capital flows into emerging markets.
“A weaker dollar will definitely lead investors to look outside the U.S., and this will be a big opportunity for countries like India,” said Madan Sabnavis, Chief Economist at Bank of Baroda. “But we need to see if the U.S. does anything to encourage investment in the country following these protective tariffs. The net effect may be hard to conjecture right now. But to begin with, there would be a flow of FPI funds to emerging markets, including India,” he added, as quoted in an Economic Times report.
From a domestic standpoint, the impact of the dollar’s decline will also depend on how competing currencies behave. Typically, a weaker dollar strengthens other currencies under ceteris paribus conditions, which could blunt India’s export competitiveness. As such, the comparative performance of peer currencies will be key to watch, said Sabnavis.
4) U.S. tariff exemptions continue to support sentiment
Investor sentiment also remained buoyed by U.S. President Donald Trump’s recent decision to delay the imposition of additional tariffs on 75 countries, including India, until July 9. The temporary reprieve, announced earlier last week, offered markets a breather amid escalating global trade tensions.
While the initial announcement sparked a relief rally across global equities, the ongoing exemption continues to lend support to Indian markets by easing concerns over potential export disruptions and trade-linked volatility.
5) Crude oil prices provide relief
Oil prices fell by more than 1.5% on Monday as investors shifted focus back to concerns that U.S. tariffs on trading partners could create economic headwinds, potentially curbing fuel demand growth.
Brent crude futures dropped $1.10, or 1.6%, to $66.86 a barrel at 0255 GMT, following a 3.2% gain on Thursday.
For India, which relies heavily on oil imports, lower crude prices offer significant relief, easing pressure on the current account deficit and helping to moderate inflationary pressures.
